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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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3
The Lessons of History

The Economic Research Service (ERS) and its predecessor, the Bureau of Agricultural Economics (BAE), have performed in a variety of roles over the three-quarters of a century since the BAE was established in 1922. Much can be learned from this long experience about the limitations and the imperatives facing a government agency responsible for research, secondary data development, and various types of analysis.

The reporting structure and organizational environment of ERS and the BAE have changed greatly over time, with substantial implications for the role, political limitations, and expected performance of a research, information, and analysis agency and for its internal culture, level of professionalism, and quality of product. It is also the case that, over the past 75 years, the nature of the food system, and consequently the U.S. Department of Agriculture (USDA) political and policy agenda, have changed drastically. These changes have created a progression of rather different challenges for the provision objective information, research, and analysis, which suggest some of the specific goals, strategies, and behaviors important to such ail agency's success. This chapter examines the experience of the BAE and ERS in order to extract the lessons history provides, for a primarily economics-based federal agency producing research, information, and analysis.

Economic Intelligence and Research in USDA

Although some agricultural data have been collected by the government (the Patent Office) since the 1840s, the Department of Agriculture, which was founded in 1862, created a Division of Statistics in 1863 to take over this responsibility.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

USDA received its first appropriation specifically for collecting agricultural statistics in 1866 (Duncan and Shelton, 1978:6; Tenny, 1947:1018). Since that time, regular monthly reports have been produced on conditions of crops and numbers of livestock on farms. The purpose of this public intelligence was to improve the equity and efficiency of local commodity markets and to warn of disease, droughts, and other local farm problems. In the nineteenth century, this became a progressively larger challenge due to the ever-growing expanse and biodiversity of farming, as the U.S. frontier marched across a continent. Better-informed decisions by the millions of farmers and thousands of agricultural market firms were the immediate objective.

Public policy in agriculture—and thus the mission of USDA—was originally limited to gathering and disseminating market intelligence and to natural science research and education designed to improve agricultural productivity and defend it against disease and pests. Throughout the nineteenth century, USDA was primarily a statistics, research, and education organization. Its likeness to a university was often remarked upon (Gaus and Wolcott, 1940:16; Wilson, 1912).

Regulation of agricultural markets also began in the late 19th century—primarily for animal health and food safety purposes and to establish common standards for weights and measures. Direct public policy intervention in markets to affect farm prices and incomes, i.e., the farm programs, did not occur until the farm crisis of the 1920s and the Great Depression of the 1930s. Social science, primarily economic research, began to develop as part of the USDA's mission only in the first decade of the twentieth century (Baker et al., 1963).

The first formal organization for data collection in USDA started with the establishment of the Division of Statistics in 1863, one year after creation of the Department of Agriculture itself. Agricultural products constituted well over half, and in some periods more than 80 percent, of all U.S. exports during the nineteenth century (Cochrane, 1993:150, 267–270; Economic Research Service, 1977). By 1902, a Division of Foreign Markets had been established to develop data on world agricultural markets (Baker et al., 1963:517). In 1903, the Foreign Markets Division was merged with the Division of Statistics to form a Bureau of Statistics. In 1914, the Bureau of Statistics was renamed the Bureau of Crop Estimates, and in 1921 it was merged with the Bureau of Markets to form a Bureau of Markets and Crop Estimates (Baker et al., 1963:80, 516–517). This merger brought together, in one organization, responsibility for the collection of farm-level crop and livestock data with that for major domestic and foreign commodity market transactions.

At the same time, economic research was slowly being developed in USDA and focused on the problems and decision needs in farming. The Office of Farm Management had first been formed in 1903 in the Bureau of Plant Industry, but it was transferred to the Office of the Secretary in 1915 (for economic and program analytic support during World War I). Its title changed to the Office of Farm Management and Farm Economics in 1919, and then in 1920 it was moved out of

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

the secretary's office to separate USDA agency status (Baker et al., 1963:107–108, 498–501). Finally, in 1922, the data collection function of the Bureau of Markets and Crop Estimates was combined with the economic analytic and research capacity of the Office of Farm Management and Farm Economics to form the Bureau of Agricultural Economics. Most BAE economists were recruited from a few land grant colleges of agriculture with Ph.D. programs. Even as late as 1930, the vast majority of U.S. agricultural economists were being trained at only three universities: the University of Wisconsin, the University of Minnesota, and Cornell University (American Farm Economics Association, 1930).

As farm production became less and less a matter of subsistence during the nineteenth and early twentieth centuries and more a monetized market transaction, the dependence of millions of farmers and market firms on USDA for market information grew apace. Over this period, farm markets expanded from primarily local or regional to national and, for some commodities, even to international in scope. At the same time, the nature and scope of the demand for market intelligence, economic research, and analysis also expanded. Periodic recessions and banking ''panics" led to disordered farm markets and major declines in farm prices and welfare during the nineteenth century, periodically demonstrating the importance to the efficiency of farm markets of broad public access to more complete and accurate market intelligence. By the turn of the century, concern for the welfare of farmers, most of whom were quite poor, led to research to understand and deal with the now-chronic economic problems of an industrializing agricultural sector that exhibited immense and repeated price and income instability (Taylor and Taylor, 1952:1–53; Edwards, 1940; Davis, 1940).

During the late nineteenth century, an academic field of farm management teaching and research had begun to develop in the land grant colleges in response to the growing complexity of farmers' management decisions under the impact of nearly continuous technological change and the commercialization of farm production. The earliest pioneers were typically agronomists and horticulturists, such as Thomas F. Hunt and Liberty Hyde Bailey at Cornell, who taught some of the first courses in the economics of agriculture. Farm management eventually evolved into today's agricultural economics profession, members of which provided much of the early leadership in the development of the Bureau of Agricultural Economics and its precursor organizations (Taylor and Taylor, 1952:53–156). By 1910, USDA was generally considered the finest agriculture science research organization in the world. The BAE reached equivalent status in agricultural economics in the 1930s and 1940s.

The importance of economics in agriculture and the professional development of agricultural economics is primarily associated with four names. H.C. Taylor at the University of Wisconsin was most influential over the period 1890 to 1930. George F. Warren, of Cornell University, was a major influence from 1900 into the 1930s. John D. Black, while at the University of Minnesota and later at Harvard University, was active from the 1920s through the 1950s.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Theodore W. Schultz, first at Iowa State College and then the University of Chicago, profoundly influenced the discipline from the 1930s to the 1980s. Taylor, Black, and Schultz earned their Ph.D.s at the University of Wisconsin, Schultz and Black both under the direction of Benjamin H. Hibbard. There were many others who contributed, but these four and their many students had a profound influence on the development of the economics of agriculture. This group and Taylor's students at Wisconsin were omnipresent in the development and direction of the BAE (Gilbert and Baker, 1997).

The problem faced by agricultural economists in the 1920s and the 1930s was a severely limited data base for analysis and an underdeveloped conceptual framework. The long-term effort in agricultural economics and the BAE was to develop a stronger data base to support analysis, along with greater sophistication in quantitative measurement and improvement of the economic and other conceptual foundations of their work. Their success was attested to in a presidential address to the American Economic Association in 1970. In it, Harvard professor Wassily Leontief (and 1973 Nobel laureate) indicted the economics profession for generally failing to design and collect data for the empirical tests necessary to validate the developing theoretical base of economics. In the speech, he exempted agricultural economics from his indictment as having achieved "an exceptional example of a healthy balance between theoretical and empirical analysis and of the readiness of professional economists to cooperate with experts in neighboring fields" (Leontief, 1971:5). Much of this early achievement can be credited to the BAE. From the late 1920s and the 1930s onward, many of the intellectual leaders of the agricultural economics and statistics professions worked in the BAE.

The BAE and Lessons Learned

The BAE was established in a period of growing economic distress and conflict in agriculture. The United States had expanded farm production during World War I to feed a war-ravaged Europe. Following the recovery of European production after the war, U.S. farm prices land values collapsed in 1920–1921, creating another major economic crisis in U.S. agriculture. U.S. farmers were left with heavy debts and excess capacity. Bankruptcy became endemic. Serious economic problems in farming continued through the 1920s into the Great Depression of the 1930s (Davis, 1940). Restrictive macroeconomic and trade policies compounded the world's economic problems. This intensified the demand not only for economic intelligence but also for economic research and policy analysis to inform public and private decisions dealing with the crisis in the United States.

From its establishment in 1922, the BAE found itself in the middle of intense political debates regarding farm relief and appropriate farm policies through the 1920s and the 1930s. This period of unending philosophical conflict over values

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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and beliefs in politics and policy is well described by two early BAE leaders, H.C. Taylor (1992) and Nils Olsen (Lowett), as well as by historian Richard Kirkendall and political scientist Charles Hardin.

The politicized atmosphere and ideological conflict led many interests to support and many others to question the worth of the BAE's statistical and analytical work, which was growing increasingly sophisticated and complex. At the same time that the BAE sought to standardize and quantify its analytic methods, it found itself under public attack; farmers and their organizations often questioned the validity of BAE estimates, which they found difficult to comprehend and the results of which often conflicted with their current perceived policy interests (Kunze, 1991:79).

As a consequence, many politicians, especially some members of Congress, grew hostile to BAE crop estimates, since they believed it was the estimates and associated price forecasts (not macroeconomic policies and declining demand or increasing supply) that were causing declines in farm prices. Congress reacted in 1929 by passing a law prohibiting the USDA from publishing any cotton price forecasts—and this legislative prohibition still stands (Townsend, 1987; Black, 1953:386–387). In addition, during the Hoover administration (1929–1933), the prohibition was extended to other farm commodities by executive action. BAE forecasts were limited by the administration to those with a "need to know" and could not be provided to the general public (Kunze, 1991:79). Faced with a debilitating problem of economic illiteracy amongst farmers, the BAE in cooperation with the land grant colleges early put an expanding effort into economic education, especially in conjunction with and in support of the market information (i.e., Situation and Outlook) work begun in the 1920s (Taylor and Taylor, 1952:447–479). The BAE outlook program expanded previous USDA market intelligence and added economic analysis. Political opportunism combined with very low levels of economic literacy among farmers, organized interests, federal program agencies, and in politics have historically plagued USDA analysis of farm markets (Cochrane, 1965:456–457; 1983:87; Lowett, 1980:65–66).

Secretary of Agriculture David F. Houston (1913–1920), an economist by training, presided over and supported the creation and development of economic work in USDA. H.C. Taylor was head of the Department of Agricultural Economics at the University of Wisconsin in 1919, when Secretary Houston invited him to Washington to head the Office of Farm Management and to help organize the economic analytic capacities of USDA. The next secretary, Henry C. Wallace (1921–1924), strongly supported the developing economic work of the department. During Wallace's tenure, a period of considerable economic turmoil in agriculture, the BAE was created and Taylor became its first chief (Baker and Rasmussen, 1975:55 Taylor 1992:31–41).

The post World War I crisis in farming was generating widely differing proposed solutions to the "farm problem." Not surprisingly, this led to intensely partisan political conflict in the 1920s and the early 1930s. The different "solu-

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

tions" ranged widely: letting the markets work without government intervention, government-led export dumping, turning management of markets over to farmer cooperative to control production and thus prices, government-guaranteed purchasing-power parity for farm prices, and a two-price domestic allotment plan to separate the domestic market from foreign markets (thus protecting a higher subsidized price for domestic producers). The BAE was asked by the various secretaries of agriculture to evaluate different proposals, some of which were unworkable as presented and all of which involved costs or problems that advocates did not want exposed in public forums. In the midst of this political turmoil in the 1920s, and the 1930s, the BAE under Taylor attempted to provide objective research and policy analysis. This objective analysis attracted critics and left the BAE and its leadership quite vulnerable when not protected by the administration.

After Secretary Wallace's death, Secretaries Gore (1924–1925) and Jardine (1925–1929) protected BAE Chief Taylor for a while, but Jardine, unable to convince him to resign, finally fired Taylor in August 1925 at the Coolidge White House's insistence (Baker and Rasmussen, 1975:55; Taylor, 1992:207–219). BAE leadership continued to turn over rapidly during the next few years. The fourth chief of the BAE, Nils Olsen, survived seven years (1928–1935) under three secretaries by following a conservative, risk-averse strategy that tried to serve the secretary's needs but kept himself and the BAE away from public involvement in analysis of policy issues on which the administration had not yet taken, or was unwilling to take, a position.

Olsen was fully committed to an objective research and information role for the BAE, but he was not a supporter of the intrusive New Deal programs. Eventually Olsen resigned in 1935 when, in his view, the new secretary, Henry A. Wallace (1933–1940), who was the son of Henry C. Wallace, grew less and less supportive. Wallace was reluctant to make decisions in an unstable political and policy environment that had, in the early New Deal, dissolved into unending ideological warfare (Lowett, 1980:222–235; Baker and Rasmussen, 1975:56–58; Kirkendall, 1982:16–17, 77). Secretary Wallace, despite his cool relations with Olsen, was an astute and heavy user of BAE intelligence and research. Indeed, beside his success in creating the first hybrid seed company and as editor of Wallace's Farmer, he was an accomplished professional geneticist, statistician, and economist.

Transformation of the USDA Role

Between 1993 and 1939, the nature of USDA was fundamentally transformed. New Deal programs of the Roosevelt administration (1933–1945) addressed the multiple problems of agriculture and rural America and led to the creation of numerous action agencies. Created in this period were the Soil Conservation Service, 1935 (now the National Resource Conservation Service); the

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Rural Electrification Administration, 1939 (now the Rural Utilities Service); the Foreign Agricultural Service, 1938; the Farm Security Administration, 1937a (later renamed the Farmer's Home Administration and today divided between the Farm Service Agency and the Rural Housing and Community Development Service); the Federal Crop Insurance Corporation, 1938 (now part of the Farm Service Agency); the Commodity Credit Corporation, 1933; and the Agricultural Adjustment Administration, 1933 (known then as the AAA or Triple A, later renamed the Agricultural Stabilization and Conservation Service and now part of the Farm Service Agency) (Baker et al., 1963:463–519). These organizations delivered services or resources or both to farmers and in many cases developed offices at the state and local level with farmer advisory committees that quickly became specialized clientele organizations. They lobbied Congress and USDA in support of the agency and its program (Kirkendall, 1982:167–223; Lowi, 1962).

This approach fragmented—and focused by function and commodity—the political interests in agriculture (Lowi, 1962; Heinz, 1970). The larger interests of the food and agricultural industry and of the nation tended to be ignored, except as the secretary and the president imposed them on the debate. The nature and dynamics of agricultural politics changed in Congress, the secretary's office, and the countryside. The internal environment of USDA was soon filled with politically powerful interests that made the secretary's role far more difficult and outmatched the political influence of all of the research and education organizations that had characterized the earlier USDA (Hathaway, 1963:201–206, 210–214; Gaus and Wolcott, 1940:64–81, 264–265; Rasmussen and Baker, 1972:Chapter 3; Lowi, 1962; Truman, 1965). In the external environment of the department, the development of a state and local grassroots program and political presence for many of these federal action agencies created a competitive, or potentially competitive, relationship with the politically active farmer organizations and with the land grant colleges' Cooperative Extension Service (Hardin, 1952, Chapters 6, 9, 15; Lowi, 1962; Rasmussen and Baker, 1972:Chapter 12). Thus, not only had the internal nature of USDA changed but its relationship with its former external partners in agriculture had also shifted from a tension-filled but generally complementary relationship to one which in specific policy areas were conflict-ridden and often inherently competitive.

In the midst of his reorganization of the department in 1938, Secretary Wallace moved the BAE, then under the leadership of Howard Tolley, to the Office of the Secretary as USDA's policy planning and coordinating arm—that is, a staff agency to the secretary doing research and policy analysis, but first and foremost helping the secretary plan and manage the action of USDA agencies on this newly created battlefield (see Figure 3.1A). By 1942, in the combat that ensued, the BAE had slowly lost significant parts of its planning and coordination role. Wallace was succeeded in 1940 by Secretary Wickard (1940–1945), who was "largely unable to use any kind of policy making machinery" (Black, 1947:1033). Finally, in 1946, a badly battered BAE was removed from its role as

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Figure 3.1

Reporting line for the Bureau of Agricultural Economics (BAE): (A) 1938–1946 and (B) 1946–1953 (dismantled in 1953).

"staff to the secretary" by Clinton Anderson, a former member of Congress and now the new secretary (1945–1948). Anderson returned the BAE to its original role as an economic intelligence and research agency (see Figure 3.1B) (Baker and Rasmussen, 1975:60–62). Paul Appleby, Wallace's deputy and organizational guru, and Harvard professor John D. Black had both argued against the

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

direct involvement of the BAE in policy decisions and anticipated the political dangers for a research unit in such a role (Kirkendall, 1982:232).

Demise and Fragmentation

By the early 1940s, the BAE had acquired a full choir of critics. These critics saw the world in simpler, more monochromatic terms than did economists. In the heat of battle, many critics had great difficulty accepting such elemental economic notions as "opportunity costs" and the "external effects" of policy actions, to say nothing of their ideological difficulty with and rejection of the centralized economic planning effort of the New Deal period in which many economists and the BAE had been so visible. The economic interests in agriculture were by now well organized and the new USDA programs had created a high-stakes struggle for political control.

Critics and enemies of the BAE included many USDA action agencies, which, with congressional support, were determined to do their own planning and resisted any coordination by others—often including the secretary. Other major critics were farmer organizations, especially the most politically influential American Farm Bureau Federation, and the major farm commodity organizations in cotton, wheat, feed grains, etc. In addition, many members of Congress were critical of the BAE, especially conservatives of both parties with important rural and business constituencies who were the major beneficiaries of USDA programs, on which many were now quite dependent (Baker and Rasmussen, 1975:61–64; Hardin, 1946, 1952).

Consequently, following a change in party control from the Truman to the Eisenhower administration in 1953, the new secretary of agriculture, Ezra Taft Benson (1953–1961), a strong critic of government planning and the market interventions of USDA over the previous two decades, announced the abolition of the BAE. Its functions were divided between two new agencies. Farm price, income, and marketing research and data collection went to the Agricultural Marketing Service. Farm management and other economic research went to the Agricultural Research Service (Baker and Rasmussen, 1975:64–65; Wells et al., 1954:1–21). Under the title "The Fragmentation of the BAE," this event was described and discussed by a distressed agricultural economics profession in its Journal of Farm Economics. Secretary Benson's case for breaking up the BAE was made by the last chief of the BAE, Oris V. Wells (1946–1953), while all other leaders of the profession in varying degrees were quite critical of the decision and its impact (Wells et al., 1954).

Strong conclusions from this experience were drawn at that time by two of the most distinguished leaders of the profession. Theodore W. Schultz (1954:19) of the University of Chicago (and 1979 Nobel laureate) asked himself "Why have these things happened? and answered:

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Essentially because agricultural economics has been so highly vulnerable to changes in the constellation of political forces within the Executive, the Congress, Farm Bureau and other interest groups and within the far-flung action agencies of the USDA.

To understand the vulnerability of the BAE, one has to appreciate the profound unfriendliness which these organized political forces, both inside and outside government, can feel for agricultural economics research that does not provide the "right" answers . . . .

The powerful AAA of the late thirties was often unfriendly to agricultural economics research, even to the Agricultural Outlook. Where an economic analysis touched them, it usually came under AAA fire. . . . The Soil Conservation Service reacted much the same . . . .

. . . To those who were in opposition to the forces represented by the USDA, this BAE effort in . . . planning was simply a Trojan horse to be destroyed, as was soon the case.

The Agricultural Outlook referred to above is the BAE's early forward-looking intelligence and market forecasting effort to improve the accuracy of market expectations and pricing efficiency in agricultural markets. The AAA (Agricultural Adjustment Administration) was the action agency responsible for farm price support and production control programs.

Schultz concluded that the economic research function could not be the agent and advocate of major programs. To do so "and thus to maximize its vulnerability, either destroys its objectivity or forces those economists who stay to do 'harmless, descriptive work'" (p. 20). He then listed five guiding principles for achieving orderly and unbiased agricultural economics research in the USDA (pp. 20–21):

    1.  

    Agricultural economics research should be placed in relatively sheltered position in relation to the political instability inherent in the USDA.

    2.  

    Agricultural economics research should be so organized that it is relatively independent from (1) the day-to-day staff work of the Secretary's office, (2) the constant, routine, "trouble shooting" work of the quick program analysis work required by the several action agencies.

    3.  

    Agricultural economics research should represent an effort at long-run analysis where competent workers seek in determine the more basic economic characteristics of agriculture and to explain the behavior of these attributes of the economy.

    4.  

    Agricultural economics research should be organized to take advantage of the strong complementarity between and among production economics, distribution economics. (of which marketing is a part) and of price and income economics. Some important functions also indicate complementarity, for example, The Agriculture Outlook and the publication of Agricultural Economics Research, the preparation of Situation Reports and others.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

    5.  

    Agricultural economics should be so organize that it has the capacity to recruit and select competent economists and to induce such individuals to join the staff and to make a career as agricultural economists in the USDA.

Professor John D. Black of Harvard, in an earlier 1947 article, reviewed and assessed the BAE experience from 1928 to 1946. His conclusion is similar to that of Professor Schultz (Black, 1947:1035–1036):

The compelling and sufficient reason why the Bureau should not be the general staff of the Department is that it cannot safety mix this function with that of collecting and analyzing the data of current change, and with other research which it very much need to do. We must therefore have a Bureau solely for these latter functions. The general staff should be attached directly to the Secretary.

Does this mean that the Bureau should be isolated from the Secretary's Office and from policy making? By no means. It should follow policy and program matters as closely as possible. It should assemble all pertinent data and information bearing on policy and analyze them as closely as possible. It should assemble all possible economic data as to how the different programs of the Department are working out, and weigh and evaluate them, It should even go so far as to predict in detail how alternative program proposals will work out. But it should not undertake to choose policy, nor even to say what will be the best policy. This latter is the function of the Secretary (italics in original).

It had begun to be clear early that the provision of objective research and analysis, and even the reporting of market statistics, could not long survive as a USDA function , if not supported internally and defended against external political assault by the administration's political leadership. Assaults came from any organized interest then unhappy with BAE analysis that did not support its program or policy position. The administration was likewise pleased when BAE research supported current programs, but not when objective research failed to support them. Assault sometimes came after a change in administrations, when it was thought that economists had given too much support to the previous administration. In his examination of the "Age of Roosevelt," the historian Richard Kirkendall concluded (1982:257):

The degree of success that the social scientists enjoyed, however, depended heavily upon their relations with these political men. The years of accomplishment from 1933 to 1940 were years of substantial support from the President and the Secretary of Agriculture; the years of frustration after 1940 were marked by little support for the social scientists from these political leaders.

This support, of course, requires political leaders to have an understanding of how to use economic policy analysis, which, as John D. Black observed, was seriously lacking in some secretaries of agriculture (Black, 1947:1033).

New Deal efforts to cope with the collapse of industrial and agricultural mar-

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

kets during the Great Depression place the accomplishments of the BAE in perspective. The government intervened to stabilize and manage these markets in the National Recovery Act of 1933 (NRA) for industry and the Agricultural Adjustment Act of 1933 and 1938 (AAA) for agriculture. The NRA was soon abandoned as a failure in a conflicted implementation of inconsistent goals, whereas for better or worse, the AAA set the framework for U.S. agricultural policy from the Great Depression into the 1990s. The explanation for the failure of the NRA and the survival of the AAA has been found to lie in the prior development of the agricultural economics profession (beginning around 1900) and its intellectual investment in understanding the problems of agriculture. This led to the creation of the BAE and the presence of a large cadre of economists and other professionals in USDA who did research to understand the nature of agriculture, its problems, and policy issues. Then in the late 1930s, the BAE was to its peril drafted by the secretary to help implement the AAA (Finegold and Skocpol, 1995:Chapters 3 and 4).

In the case of the NRA, there was no prior intellectual investment of comparable scale in the problems and economic behavior of industry. Thus, lacking a cadre of experienced industrial economists in government, the conceptual development and implementation was primarily dependent on politics and recruits from business, most of whom were unable to rise above the experience and interests of their specific firm or industry to address the larger national interest in recovering from the collapse of the U.S. economy. Without the presence of the BAE, it is likely that the AAA would also have failed before it was hardly under way. This investment in economic research and related analytic capacity—and the lack of such in the case of the NRA—is testimony to the value and the need for such capacity in support of public policy (Finegold and Skocpol, 1995).

Many economists today believe the AAA was an unqualified economic policy disaster. Although there have been substantial undesirable economic costs, they forget or ignore the fact that the growing violence and social disorder of the Great Depression years threatened great political costs, including the unraveling of the democratic fabric of U.S. society. The political judgment of the day was that the AAA constituted the least bad, politically feasible option. The BAE favored a direct income subsidy, but its budget costs were high and political beliefs during the depression made direct income transfers philosophically unacceptable. The price supports and production controls that came out of Congress, some variation of which the nation has lived with ever since, are part of the price paid for the smothering of the radical, if not revolutionary, even demagogic ideas then emerging in national and agrarian political discourse. If there was an error, it was in naively believing that the AAA price and production controls were a temporary expedient.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

ERS and Lessons Learned

After eight years of fragmented existence as parts of several divisions in two different line agencies, most of the functions of the old BAE were reassembled but reconfigured in 1961. At the beginning of the Kennedy administration, USDA's economic analysis and research activities were combined as the Economic Research Service. The collection, processing, and dissemination of agricultural statistics for USDA became the responsibility of another free-standing agency, the Statistical Reporting Service (Bowers, 1990; Cochrane, 1961). President Kennedy and his new secretary of agriculture, Orville Freeman (1961–1969), had been persuaded by two presidential campaign advisers, agricultural economists John Kenneth Galbraith and Willard W. Cochrane, to reassemble the functions of the BAE. One of the secretary's first acts was the creation of ERS and the Statistical Reporting Service (later renamed the National Agricultural Statistics Service, or NASS). Subsequently Cochrane was appointed economic adviser to the secretary and director of agricultural economics (at the assistant secretary level). In that role, he presided over the establishment and initial direction of ERS and NASS. Both agencies reported to Cochrane, as did a new small policy advisory unit, the Staff Economists Group, that worked in direct support of Cochrane in his role as economic adviser to the secretary (see Figure 3.2) (Cochrane, 1961, 1965).

The mission envisioned for ERS in its early days is an important baseline for understanding ERS today and the changes that have taken place as it approaches the fourth decade of its existence. Cochrane described that mission clearly. He made the case that ERS should be viewed as a ''staff agency to the Nation" (Cochrane, 1983:30):

It must be prepared to respond regularly and effectively, without compromising itself, to the economic analytical needs of the Office of the Secretary; it must understand and appreciate the intelligence needs of members of the Congress and find ways of satisfying those needs without coming into conflict with the administration in power; and it must recognize and anticipate the information and intelligence needs of a diverse national public and develop effective channels for meeting those diverse needs.

Both Cochrane and his successor as director of agricultural economics, John Schnittker, believed that ERS should be responsible for all agricultural economics work in the Department of Agriculture.

The ERS has been in existence for 37 years, only slightly longer than the life span of the BAE. Has the mission of ERS changed in any fundamental way since the 1960s? If so, how? What lessons can be learned from its experience? Meaningful evaluation of ERS's research program and its performance requires a clear answer.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Figure 3.2

Reporting line for the Economic Research Service (ERS), 1961–1993.

Policy and Political Environment

Although, over the history of the BAE, the bulk of its resources was devoted to the problems of agricultural production, marketing issues were added to its agenda well before its demise in 1953. Marketing research expanded further during 1953–1961, the period when economic research in marketing was part of the Agricultural Marketing Service. Over the same period, increased attention was also being given to work on "hired farm workers, local studies concerning old age, health services, levels of living and rural industries" by former BAE economists now in the Agricultural Research Service (Koffsky, 1966:415).

The BAE and ERS faced rather different working environments. One clear difference is found in the structure of their reporting line (Bowers, 1990:234):

The differences between ERS and the BAE were obvious. The new agency reported not to the Secretary, as the Bureau did, but to the Director of Agricultural Economics. It had no planning functions and political work was carefully

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

isolated in the Director's office in order to preserve the objectivity of ERS work. ERS Administrators would be civil service employees [and] the political side of staff work would be handled by a Staff Economists Group.

The BAE, along with the Bureau of Labor (which later became the Bureau of Labor Statistics), were the earliest experiments in developing systematic economic research to support federal policy (Duncan and Shelton, 1978:6–7). This BAE experiment occurred in the midst of an even greater experiment in government action to deal with the threatened breakdown of the fabric of the society and economy during the Great Depression and, without a pause, the demands of World War II. Thus, the BAE may be said to have worked in revolutionary, certainly politically turbulent, times. By 1961, when ERS was founded, policy for agriculture had settled into somewhat more stable patterns. Change, even major change, continued to occur, but it was by comparison evolutionary. Many of the same forces buffeted ERS, but they were less dramatic in scale, thus less visible and less inclined to involve highly visible political duels to the death. As a result, this review of ERS history focuses not on a few dramatic events so much as on the often-unexciting details of evolving changes in (1) the capacities of ERS, (2) agriculture and society that modify policy and political agendas, (3) ERS research and intelligence produced in response to policy need, and (4) ERS internal and external organization made in support of the evolving agenda of ERS research and information products.

It is also the case that the BAE operated in a relatively closed national economic setting, in which international trade, monetary, and fiscal impacts had little influence on the U.S. food and agriculture system. Beginning in the 1960s, this changed, as a large international capital market began to emerge and to expand rapidly through the 1970s and 1980s. Thus, early in its existence ERS was confronted with a U.S. agricultural and food economy in which global production, trade, capital market movements, and other international macroeconomic forces and policies started to have major impacts on the performance and problems of the U.S. food and agriculture system. Consequently, the research and policy analysis problems facing ERS grew progressively more complex. Indeed, the development of secondary data and analysis, such as the various indicators and the Situation and Outlook data and analysis also became more of a challenge. Understanding and explaining sector performance in an open economy is inherently more difficult.

As this external environment, including political issues and policy decisions facing USDA, has changed, so have the opportunities and imperatives driving ERS information, policy analysis, and research output. Major changes in the food and agriculture sectors, changes in society's need for research, analysis, and information products, and a new administration's political and policy agenda are often reflected in internal changes in the organization of ERS.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

The 1960s: A New Beginning in a Different Era

The ERS faced a rather different and evolving pattern of policy issues and research needs in the 1960s, compared with the issues that faced the BAE of the 1930s and the 1940s. One such change involved the function of foreign market development, intelligence, and research. The interest in foreign markets was first given division status in 1930, as the Foreign Agricultural Service Division of the BAE. However, this division was transferred out of the BAE to the Office of the Secretary in 1938 as its action arm for export promotion to reduce farm surpluses. The growing support for export promotion during the depression was driven by the popular political belief that one could "export the farm problem" by exporting the surpluses that were depressing prices and incomes. Except for the period of World War II, agricultural exports were limited in this era. The small Foreign Agricultural Analysis Division and some functions of trade policy were transferred back from the secretary's office to the newly created ERS when the economic research, analysis, and secondary data development functions of USDA were reassembled in 1961 (Baker et al., 1963:498–500, 505). The initial organization of ERS included three domestic and two foreign economic intelligence, policy analysis, and research divisions: (1) Economic and Statistical Analysis, (2) Farm Economics, (3) Marketing Economics, (4) Development and Trade Analysis, and (5) Regional Analysis (Box 3.1; Cochrane, 1961:73).

The 1960s saw the beginnings of major postwar domestic political changes. Reapportionment of the House of Representatives in 1960 and 1970 and the Supreme Court's "one-man, one-vote" decision in 1964 increased urban, consumer, and labor influence while decreasing rural and farm influence. Enactment of the 1965 farm bill saw the first evidence in agricultural politics of an organized labor, welfare, and consumer coalition with interests in low food prices and food stamps for striking workers and the poor. The agricultural committees in Congress were forced to combine all their previously separate commodity support and other agricultural bills into one large "omnibus" legislative package. Agricultural interests, despite their differences, had to stand together in a common coalition in order to achieve their major legislative goals. This omnibus legislation now encompasses not only traditional farm programs but also policy for resource conservation and the environment, P.L. 480 subsidized and free foreign food aid, domestic food assistance, rural development, research, and extension. By the end of the 1960s, this developing coalition of diverse interests was necessary to achieve a majority vote for passage of farm legislation—as well as for the other pieces of the omnibus package (Bonnen, 1980).

President Johnson's Great Society programs significantly expanded the USDA role in assisting the poor with food stamps, school lunches, and improved nutrition, although, in the last half of the 1960s, budget pressures of the Vietnam conflict reduced or constrained expenditures on domestic programs. This period is the origin of increased concern about food safety and environmental quality.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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BOX 3.1
Division Organization of the Economic Research Service, 1961–1998

1961

  • Development and Trade Analysis
  • Economic and Statistical Analysis
  • Farm Economics
  • Marketing Economics
  • Regional Analysis

1962

Farm Economics was split into two divisions:

  • Farm Production Economics
  • Resource Development Economics

1965

Resource Development Economics was split into two divisions:

  • Economic Development
  • Natural Resource Economics

1965 Organization

  • Economic Development
  • Economic and Statistical Analysis
  • Farm Production Economics
  • Foreign Development and Trade
  • Foreign Regional Analysis
  • Marketing Economics
  • Natural Resource Economics

1971

Foreign Economic Development Service transferred to ERS from the secretary's office as the Foreign Development Division

1973

Three divisions were dissolved:

  • Economic and Statistical Analysis
  • Farm Production Economics
  • Marketing Economics

Two new divisions were created:

  • Commodity Economics
  • National Economic Analysis

Five other existing divisions continued:

  • Community and Human Resources
  • Foreign Demand and Competition
  • Foreign Development
  • Natural Resource Economics
  • Resource and Development Economics

1977

The Economics, Statistics and Cooperatives Service (ESCS) was created by combining ERS, SRS, and FCS as separate units under one administrator.

ERS divisions remained much the same as in 1973:

  • Commodity Economics
  • Economic Development (from earlier merger of Community and Human Resources Division and the Natural Resource Economics Division)
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
  • Foreign Demand and competition
  • National Economic Analysis

Foreign Development transferred from ERS to newly created Office of International Cooperation and Development

Reorganization September 1981 ESCS disbanded, returning ERS and SRS to agency status; ERS division organization had been changed during ESCS period to:

  • Economic Development
  • International Economics
  • National Economics (merger of Commodity Economics and National Economics Analysis divisions)
  • Natural Resource Economics (pulled back out of Economic Development)

1983

ERS field staff disbanded but division organization remained unchanged

1987

  • Commodity Economics
  • Agriculture and Table Analysis
  • Agriculture and Rural Economic Resources and Technology

October 1994 Reorganization

  • Commercial Agriculture
  • Food and Consumer Economics
  • Natural Resources and Environment
  • Rural Economy

October 1997 Reorganization

  • Food and Rural Economics
  • Market and Trade Economics
  • Resource Economics

Sources: Baker and Rasmussen (1975), Bowers (1990), Cohcrane (1961), Koffsky (1966) and materials supplied by the Economic Research Service, 1998b.

There was also a growing policy focus on problems of low-income rural people and the communities "left behind" by the industrial development of agriculture (Daft, 1991:149). Thus began another fundamental but slow transformation of the Department of Agriculture from its near exclusive focus on farmers and agricultural markets eventually to include, as also important, public concern over nonfarm rural people, depressed rural regions, environmental quality, domestic and imported farm labor, and the consumer's interest in food safety, adequate nutrition, and access of low-income consumers to food. These concerns began to change the research agenda of ERS. The great expansion in action and regulatory budgets in these new areas, however, did not begin to approach the scale of the USDA farm program budgets until the early 1970s.

Attempts to ensure adequate nutrition for the poor began during the period of massive unemployment in the 1930s. Fred Waugh, a BAE and later an ERS economist, developed the economic concept of food stamps and did the analysis

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

that established its, feasibility as a more effective alternative to the direct physical distribution of food. After a limited experiment in 1939–1943 and a larger one in 1961–1964, a permanent, nationwide food stamp program was enacted in 1964 (Tweeten, 1979:397–395).

During the early 1960s, ERS became deeply involved in research on foreign trade. The U.S. policy emphasis on P.L. 480 emergency food aid and subsidized farm exports for market development abroad created pressures and opportunities for ERS to expand its research in this area (Baker and Rasmussen, 1975:66). Also, the Kennedy round (1963–1967) of negotiations under the General Agreement on Tariffs and Trade (GATT) began an international effort to address agricultural trade restrictions. This focus continued through the Tokyo round (1973–1979) and the most recent or Uruguay round (1986–1994) of trade negotiations (Tweeten, 1992:211–215).

In addition to foreign trade research, over the first half of the 1960, ERS responded to new policy initiatives of the Kennedy-Johnson administration with expanded efforts in natural resource policy issues, rural economic development, river basin and watershed development, labor and employment issues, and low-income and poverty problems in rural America (Bowers, 1990:238).

Although over 70 percent of the first ERS budget went to traditional farm economics and marketing work, the initial division-level organization in 1961 had already begun to reflect the new policy agenda in foreign trade and development (Cochrane, 1961:72–73; Bowers, 1990:237). Then in December 1962 the Resource Development Economics Division was established to focus on rural resource issues and rural development. By 1965, this new division had been divided into the Economic Development and the Natural Resource Economics divisions. At the same time, the Development and Trade Analysis Division was renamed the Foreign Development and Trade Division to differentiate it from the domestic focus of the new Economic Development Division (Cochrane 1983:31; Baker and Rasmussen, 1975:65–67; Bowers, 1990:238). By 1965, less than half of all ERS publications from in-house research dealt with the conventional agricultural subject matters of the BAE period (Koffsky, 1966:415). The research, analysis, and secondary data development agenda of ERS was already evolving (Box 3.1).

Willard Cochrane resigned as director of agricultural economics in 1964 and was replaced by the director of his policy staff, John Schnittker. The first administrator of ERS, Nathan Koffsky (1961–1965), became director of agricultural economics in 1965 when Schnittker, left and was succeeded as ERS administrator by M.L. Upchurch (1965–1972). Over the decade of their collective tenure, ERS appropriations and personnel numbers rose and then fell back to their original fiscal 1962 levels. The expanding number of research topics created stress on ERS resources that could be alleviated only partially by reallocation and reorganization. Budget transfers from other agencies, such as the Soil Conservation Service and the Agency for International Development, made the expansion in

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

the scope of ERS research possible, especially in the last half of the 1960s (Bowers, 1990:237; Baker and Rasmussen, 1975:67–68).

Koffsky and Upchurch both straggled with the problem of finding the resources for and sustaining the appropriate balance between ERS-initiated long-term or basic lines of research inquiry and the externally mandated or requested problem analysis. ERS found that they had political support or demand for short-run provision of secondary data development and analysis relevant to current economic problems and political perceptions, but there was little recognition or support for investing in the longer-term foundation of knowledge necessary to sustain high-quality analytic work, whether short-term or long-term (Baker and Rasmussen, 1975:67–68). What is most commonly not understood is that, especially when developing new problem areas for analytic work, basic research is needed to create the concepts, measurement techniques, and models to address applied problem (Johnson, 1986:Chapter 2). This is required to identify and understand the important characteristics, changing structure, and behaviors of the problem. In contrast, the need for and acceptance of "quick and dirty" policy information are inherent need, that result from the time pressures faced by political-level decision makers. With limited or declining resources, the necessity to service large numbers of immediate decisions can make it difficult for a research and analysis unit to maintain the high quality of analytic product that its reputation and support depend on in the long run.

The 1970s: A Tumultuous Decade

A major economic shock in 1972–1973 shock the world. The United States shifted over the 1971–1973 period from a fixed to a flexible exchange rate regime, effectively devaluing the dollar and also leaving U.S. domestic markets more open to the effects of international market events. Widespread drought led to a series of national crop failures. The Soviet Union experienced extensive crop failures and, without warning and for the first time, contracted to import large amounts of grain instead of rationing their short crop. The world was left with a major shortage of grain and an unprecedented increase in food prices (Hathaway, 1974; Schuh, 1974). This shock was compounded for consumers by the inflationary effect of the newly formed Organization of Petroleum Exporting Countries (OPEC) cartel's reduction in oil production, causing a sharp rise in energy prices and a flood of money from OPEC country profits into the world's financial system. World market commodity prices, especially primary products, rose with inflation (Tweeten, 1989:336–341; Cochrane, 1993:150–170).

In the face of wide fluctuation in domestic food prices, the United States imposed a series of export embargoes and constraints on surplus disposal in a mostly symbolic effort to protect and stabilize some domestic prices. The embargoes had limited impact and created more problems than they solved, but the

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

situation generated increased demands on ERS domestic and international agricultural research and market analysis (Economic Research Service, 1986).

Over the same period, the United States was involved in the Tokyo round of the GATT made negotiations (1973–1979) and also was experiencing a massive growth in agricultural exports. Between 1970 and 1980, U.S. agricultural exports grew from $7.3 to $41.2 billion—effectively internationalizing the U.S. agricultural sector (Council of Economic Advisers, 1998:397).

This export boom was made possible by several events. As mentioned above, an overvalued dollar was devalued. Sustained world economic growth, especially in the developing countries, increased world food demand. And agricultural legislation from the 1960s to 1973 changed U.S. agricultural policy from a regime of high price supports, set well above world prices, to low prices with a compensatory direct payment from the U.S. Treasury to farmers to make up the difference in farm income. This policy change shifted much of the cost of farm income support from consumers to taxpayers and began to give U.S. farmers sustained access to world markets for the first time since price supports and acreage controls were introduced in the 1930s. Farm prices became far more volatile, creating new challenges for ERS price forecasters.

Interest in rural development and the failing vitality of many rural communities grew in Congress during the 1970s, but this interest was not shared by the Nixon administration (Daft, 1991:149). It had by then become clear how fallacious was the traditional assumption that the farm programs constituted a policy sufficient to sustain all of rural America. ERS had begun to construct the first reasonably systematic data base for rural development. Although the United States has a large data base on the urban population concentrations of metropolitan areas, its rural areas of low population density are more costly per 1,000 of the population surveyed and continue to lack adequate and reliable data for most policy purposes (National Research Council, 1981).

Until the 1970s, the federal role in national environmental regulation was focused on managing public lands, soil conservation, and legislative responses to specific issues. The passage of the National Environmental Policy Act of 1969 began to move the country toward a broader national program of environmental protection and management. By the end of the 1970s, the United States was enacting and enforcing national regulations across a broad array of national concerns: water quality, air quality, pesticides and toxic chemicals, hazardous wastes, occupational health and safety, mine safety, ocean pollution, coastal zone protection, and resource conservation and recovery (Council on Environmental Quality, 1979–1984).

The context of environmental and resource conservation policy in agriculture also began to change in the 1970s. The soil conservation programs, begun in the drought conditions of the Great Depression, were seen as an integral part of the farm programs and helped create support for the production controls and price

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

supports. From the 1930s to the 1970s, soil conservation goals and production adjustment objectives were viewed as mutually supportive of each other. The worldwide growth in effective demand for food and the consequent export boom and high prices of the 1970s led to elimination of U.S. production controls in 1974 through 1977 and to intensification of turn production and a major change in land use. Grasslands were plowed up for crop production; highly erodible land was brought back into production; and terraces, windbreaks, and shelterbelts that took years to establish were torn out. The conservation practices encouraged by government policy since the Great Depression were swept away (Potter, 1998:19–26). It was clear from ERS research that the commodity programs as administered had become destructive of and no longer consistent with an commitment to soil conservation (Reichelderfer, 1985).

A broader environmental consciousness of human impacts on the balance of nature had begun 15 years earlier with Rachel Carson's Silent Spring (1962). By the end of the 1970s and the early 1980s, environmental and natural resource protection advocates and organized interests had begun to be major players in the public debate over USDA legislation. All of this influenced discussion of agricultural and rural resource uses in major ways and began a steady growth in USDA budgets for environmental and natural resource research and regulation (Figure 3.3). The capacity of ERS to deal with this diverse set of natural resource issues built on and was sustained in part by its long investment in the data base on and analysis of land use. This work began in a significant way in the Division of Land Economics in the 1920s under L.C. Gray. In the 1970s, land use work for policy purposes ranged from major river basin planning efforts with the Soil Conservation Service, the Forest Service, and others, evaluation of major watershed projects, foreign ownership of U.S. farmland, soil and water conservation, resource inventories, farmland protection, water quality assessment, and the impact of technologies on land and studies of ground water contamination (Cotner and Heneberry, 1991).

The politics of agriculture continued to change over the 1970s. The intense specialization and commercialization of production that accompanied rapid increases in agricultural productivity sine the 1950s had, by the decade of the 1970s, fragmented the economic interests. in agriculture. Conflict between farm producer interests and various other elements of the food system made the legislation coalition in agriculture and the food system increasingly contentious and unstable. The White House and the secretary of agriculture were now commonly confronted with no-win situations in which there was little political incentive to provide legislative leadership. Yet they often still had to settle policy issues that were forced to the secretary and White House levels by otherwise unresolved conflict. By the early 1970s, passage of agricultural legislation was not possible without at least a tacit coalition of consumer, labor, and urban welfare interests. Food stamps had become the glue that held sufficient political support in place to

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Figure 3.3

USDA outlays by major program category, 1962–1996. Source: Economic Research Service, Historical Budget Outlays, electronic data base, U.S. Department of Agriculture, March 1995.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

pass ''farm legislation" (Bonnen, 1980). The largest impact on USDA budgets during the 1970s came from rapid expansion in the food stamp program during the Nixon-Ford and Carter administrations (Figure 3.3).

The main consequence for ERS of the tumultuous decade of the 1970s was an agenda for research and analysis that expanded to cover a more diverse range of topics than it had addressed in the 1960s. It dealt with not only the effects of the major events of the early 1970s on domestic and foreign agricultural markets of the United States, but also the impacts of the subsequent U.S. export embargoes on those markets of 1973–1975 and 1980 (Economic Research Service, 1986). The Food and Agriculture Act of 1977 shifted farm income support calculations from a parity price basis to a more complex and contestable cost of production measure, which the law then specifically required ERS to produce. ERS has subsequently adapted these cost of production indicators for individual crops to the many subsequent changes in farm legislation without getting embroiled in abrasive political disputes.

The commodity market-oriented Situation and Outlook (S&O) program (described in Chapter 5), begun in the 1920s, reached a highly sophisticated analytic capacity in the 1970s. ERS increasingly developed a commodity-oriented organizational framework, which integrated all related intermediate and long-term research (including work on econometric methods), policy analysis, market intelligence, and the supporting secondary data and information base. ERS pioneered in the development of econometric models of national and later international agricultural commodity markets now commonly in use. An aggregate U.S. agricultural sector model was developed for assessing commodity said regional sector interactions and other policy impacts. This approach brought together commodity teams that included econometricians, market analysts (with institutional knowledge and informational networks across the market), policy analysts (with policy informational networks), and experienced statistical clerks (who could quickly spot data aberrations). The S&O teams interacted almost continuously in a process that both tracked and simulated the agricultural sector and its policy and market changes. The development of this S&O system capacity is described by Abner Womack (1991).

During the 1970s, ERS provided important analysis of the impact on U.S. markets and on its trading partners of the fundamental shift in U.S. farm policy from direct price controls to letting markets set prices. It provided research in support of the U.S. Tokyo round of trade negotiations (1973 to 1979) under GATT. Work was done on the potential for sending U.S. agricultural exports to selected developing country markets and on some of the related economic development problems of the low-income nations of the world. ERS began conducting research on the rapidly changing structure and productivity of the U.S. agricultural sector. A growing range of environmental issues and regulations was addressed and natural resource economics problems explored. In assessing this challenge, the USDA historian, Douglas Bowers observed (1990:236–237):

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

"without increases in personnel, the only way to undertake new research was to cut back somewhere else. . . . The ability of ERS to shift into new areas became key to its success." One area of ERS to feel significant budget erosion in the 1970s was rural development.

This growing scope of research and analysis was done in a context in which ERS personnel numbers fluctuated around an average of 1,000—of which about half or less were economists. An inflation-adjusted ERS budget began the decade in the low $60 millions, declined a bit by mid-decade, and by 1970 had risen to just over $70 million in constant 1996 dollars (Tables 3.1 and 3.2). Quentin West, who succeeded Upchurch as ERS administrator in 1972, was somewhat more successful than his predecessors with congressional appropriations for ERS. It has also been observed, in reference to the 1960s and 1970s, that "in the long run, it was probably the continued backing for ERS from the Secretary's Office that was the most important factor in winning more support from Congress" (Bowers, 1990:236).

West soon presided over another reorganization of ERS division structure while experimenting with a matrix management system of temporary task groups to address specific problems as they arose, rather than assigning such work to a division. The experiment pushed ERS further toward more short-term service work and was often disruptive of other ERS organization and research activities. The experiment ended when West left for another USDA position in 1977 and was succeeded by Kenneth Farrell (Rasmussen, 1991:87).

Another experiment began in 1977, and much energy was spent in the creation, internal resistance to, and management of an "ill-considered and unworkable" administrative structure that was the result of a USDA response to a Carter administration commitment to reduce the number of government agencies (Rasmussen, 1991:87–88). This cosmetic effort removed ERS, the Statistical Reporting Service, and the Farmer Cooperatives Service from agency status and placed them under the direction of the administrator of a new agency, the Economics, Statistics and Cooperatives Service (ESCS). This arrangement did little more than add an additional administrative layer to the reporting line. The incoming Reagan administration disbanded ESCS in September 1981, returning ERS and SRS to agency status (Rasmussen, 1991:87–98). The pressure from its clientele had extracted the Farmer Cooperatives Service from ESCS a bit earlier.

The 1980s: Farm Crisis and Recession

The decade of the 1980s saw an end to the economic expansion of the 1970s. Farmers had faced strong incentives in the 1970s to expand production and to invest in new productive capacity. Acreage controls were dropped during the 1974–1977 period, when expanding effective world demand for food caused market prices for U.S. farm products to run well above government support levels. In addition, negative real interest rates prevailed over much of the decade of the

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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TABLE 3.1 Funds Appropriated for the Economic Research Service (ERS), Fiscal 1962 to Fiscal 1996

Fiscal Year

Appropriated Funds ($ million)

Inflation Index (1987=100)

Appropriations in Millions of 1996 Dollars

Transfers to ERS in Millions of 1996 Dollars

Total Funding in Millions of 1996 Dollars

1962

9.7

22.6

58.6

7.9

66.5

1963

9.5

23.1

56.2

10.1

66.2

1964

9.2

23.7

53.0

20.2

73.2

1965

10.9

24.4

61.0

21.3

82.3

1966

11.8

25

64.5

25.7

90.2

1967

12.4

26.1

64.9

27.2

92.1

1968

12.8

27.8

62.9

26.0

88.9

1969

13.4

29.2

62.7

24.3

87.0

1970

14.6

31.6

63.1

16.4

79.5

1971

16.1

34

64.7

14.5

79.1

1972

16.5

39.3

57.4

13.6

70.9

1973

18.1

41.9

59.0

11.4

70.4

1974

19.6

45.5

58.8

10.2

69.1

1975

22.4

51.2

59.8

10.4

70.2

1976

25.8

54.1

65.1

10.4

75.5

1977

28.0

57.7

66.3

9.5

75.8

1978

31.7

61.7

70.2

11.3

81.5

1979

35.2

66.4

72.4

11.1

83.5

1980

36.5

73.3

68.0

11.2

79.2

1981

39.5

82.1

65.7

10.3

76.0

1982

39.4

85.9

62.7

8.0

70.6

1983

39.0

89.5

59.5

8.4

67.9

1984

44.3

91.3

66.3

4.0

70.3

1985

46.6

95.7

66.5

3.6

70.1

1986

44.0

98.6

61.0

3.3

64.3

1987

45.0

100

61.5

2.6

64.1

1988

48.2

101.4

64.9

2.0

67.0

1989

49.3

107.5

62.6

2.5

65.2

1990

50.7

111.5

62.1

2.5

64.6

1991

54.4

116.5

63.8

3.4

67.2

1992

58.7

119.8

66.9

7.2

74.1

1993

58.7

124.3

64.5

11.5

76.0

1994

55.2

129.1

58.4

9.9

68.4

1995

53.9

(est) 132.7

55.5

10.0

65.5

1996

55.1

(est) 136.6

55.1

7.2

62.3

 

Source: Information Services Division of the Economic Research Service, U.S. Department of Agriculture. The inflation index is based on federal government purchases (1962–1971) and federal government nondefense purchases (1972–1994) as published by the Bureau of Economic Analysis, U.S. Department of Commerce. Data for 1995–1996 are estimates based on change in the Consumer Price Index.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

TABLE 3.2 Economic Research Service Personnel Fiscal 1962–1998 (in full-time equivalents)

Fiscal Year

Total FTEs

Fiscal Year

Total FTEs

Fiscal Year

Total FTEs

1962

1,095

1975

1,057

1988

791

1963

1,000

1976

1,059

1989

792

1964

1,073

1977

945

1990

780

1965

1,159

1978

970

1991

773

1966

1,142

1979

933

1992

804

1967

1,189

1980

1,039

1993

795

1968

1,222

1981

993

1994

718

1969

1,059

1982

946

1995

625

1970

1,072

1983

903

1996

591

1971

1,118

1984

876

1997

570

1972

1,044

1985

866

1998

554

1973

1,030

1986

846

 

 

1974

1,021

1987

813

 

 

 

Source: Information Services Division of the Economic Research Service, U.S. Department of Agriculture.

1970s, as inflation galloped ahead of interest rates. Market expectations were for worldwide food shortages and a rising real cost of food. With such inducements, many farmers borrowed heavily to increase their productive capacity (Tweeten, 1989:343–348; Cochrane, 1993:150–170).

When inflation reached double-digit levels by the late 1970s, the Federal Reserve Board slammed on the brakes with double digit interest rates in October 1979, abruptly ceasing to fund the budget deficit. The financial markets responded. The real value of the dollar, which had been declining in the 1970s, began appreciating rapidly through the first half of the 1980s, making U.S. exports more expensive (Council of Economic Advisers, 1998:247–248). Also, the world economy slid into recession in the early 1980s, cutting economic growth and further reducing the effective demand for U.S. agricultural exports.

The large inflationary flow of OPEC monetary assets into the international financial system in the 1970s created easy access to borrowed capital and a buildup of national debt in developing nations, especially in Latin America. As recession set in, and with rising interest rates in the 1980s, some countries had to refinance or face default on their debt. This financial crisis added to the impact of the recession on world trade. U.S. macroeconomic policy in the 1980s added to the international problem by running a mix of tight monetary policy with an expansionary fiscal policy. The resulting large and growing federal budget deficits had to be financed in part from international capital markets, putting further pressure on interest rates (Council of Economic Advisers, 1998:247–248).

As effective demand for U.S. agricultural products declined in the recession

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

of the 1980s, U.S. farm prices dropped drastically along with farm land values, while input costs rose at an even faster pace. Instead of the expected food shortages, surplus stocks and program costs grew rapidly. This recession and excess agricultural capacity created the 1982–1986 farm crisis in which many farmers who had borrowed most heavily during the expansion of the 1970s faced a negative cash flow and were often unable to pay the carrying cost of their debt. Farm bankruptcies became widespread as farmers faced the most severe financial problems since the Great Depression (Stam et al., 1991). It also turned the USDA and ERS agendas toward a greater focus on farmers' problems.

Unfortunately, the 1981 farm legislation had assumed that the inflation, food shortage, and demand expansion of the 1970s would continue indefinitely. Congress wrote into legislation a specific set of rising price supports that exceeded the declining world market prices in the early 1980s. Although farm income was protected by deficiency payments, U.S. exports lost market share to competitors, and growing government-held Commodity Credit Corporation stocks burdened the market (Tweeten, 1989:341–345; Cochrane, 1993:154).

By 1982, the new administration in the USDA not only faced an entirely different set of problems than they had anticipated in 1981, but also suddenly and unexpectedly they had to reverse policy direction—from a philosophically comfortable free market approach to one of aggressive government management of the market (Lesher, 1991). It remained for the 1985 Farm Security Act to repair a self-inflicted wound that delayed the agricultural sector's recovery (Tweeten, 1989:341–345). U.S. farm exports began to rebound after 1985 as the world recovered from recession, and the 1985 agricultural legislation programmed U.S. price support loan rates to stay well below world market prices. This recovery coincided with the start of the Uruguay round of trade negotiations under GATT (1986–1994), in which a major U.S. objective was reduction of agricultural trade barriers (and thus farm subsidies), especially in the European Common Market.

Through each round of trade negotiations, ERS had become more involved, developed greater capacity, and provided more economic research and analysis on agricultural trade issues. ERS had a significant impact on the Uruguay round (1986 to 1994) through analytic support of the secretary and the U.S. trade negotiators. A major contribution was the provision of a single quantitative measure of the different barriers to trade calculated for the 40 largest trading countries—as we said in Chapter 2, identifying winners and losers in agricultural trade. Its "producer subsidy equivalent" provided a comparable measure of how badly a nation was sinning against the ideal of free trade. A similar measure of consumer food subsidies, a "consumer subsidy equivalent," was also provided. These synthetic measures had a significant influence in framing the issues for negotiations between participating countries, although estimates for some specific commodities did not result in entirely defensible results.

Two unavoidable facts condition the future of U.S. agricultural trade. First, any significant expansion in demand for U.S. farm output now depends on ex-

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

ports. Expansion in domestic food demand is severely limited by the slow growth in the U.S. population combined with almost no increased demand for farm food production as income increases. At the high per capita income levels of an industrial nation, the U.S. already consumes about as much food as physically possible. Thus, economic intelligence and research on agricultural trade will continue to be a major item on the political agenda of farmers, farm input firms, and the food industry. Second, the demand for U.S. food and agricultural exports depends on continued economic growth in low- and middle-income developing nations and improved equity in the distribution of income in those nations.

It was 1994 before farm exports regained their 1981 levels and 1995 before the net worth of U.S. farms regained their 1980 level (Stam et al., 1991). By the late 1980s, farm policy and farm program budgets (and subsidies) were being politically constrained by the pressures to reduce trade barriers in agricultural markets and by efforts to slow a burgeoning U.S. budget deficit. Throughout the 1980s, ERS economic analysts and researchers faced the pressures of a full and an increasingly diverse agenda of demands (Lesher, 1991).

New environmental and food-related interest and advocacy groups were propelling legislative change that affected the ERS agenda. By 1980, the involvement and influence of environmental interest groups in negotiations on farm legislation was unavoidable. By the middle 1980s, passage of farm legislation was not possible without satisfying some of the major goals of environmental interests. The pressure to restrain the rapidly expanding budget deficit was turning federal budget making into a zero-sum game, which made farm bills even more difficult to pass than had been the case in the 1970s. Broader political coalitions were now necessary for enactment of farm legislation. Growing public concern over the environmental effects of farm programs made the more pragmatic of organized environmental interests attractive legislative partners for farm interests. As a consequence, the radical notion of the early 1980s of forcing farmers to comply with conservation requirements to be eligible for commodity program support became law in the Farm Security Act of 1985. This form of cross-compliance provided assurance that farm and environmental policies were consistent, muting environmental criticism of farm programs. Plowing up erodible soils ("sod busting") or draining remaining wetland ecosystems ("swamp busting") now made one ineligible for farm program support. Major policy questions were raised in this change. Indeed, the change itself was fueled in part by the factual base provided by prior environmental research done in ERS (Potter, 1998:50–51, 56–57, 61–64).

Over the decade of the 1980s, USDA publications show that ERS research and analysis covered a still-widening spectrum of topics, but at the same time, due to the farm crisis, it increased the focus on problems related to agriculture in production, finance, trade, environmental pollution, and natural resource sustainability and conservation. ERS prepared background materials and analysis for the 1981 Agriculture and Food Act, the 1983 payment-in-kind legislation, the

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

critical Food Security Act of 1985, and the 1990 Food, Agriculture, Conservation and Trade Act. The increasing complexity of the titles on these farm acts is indicative of the growing diversity of the subject matter and the political coalitions involved in the legislation. This broader agenda meant that, besides agriculture, ERS was also doing work on food stamps, direct food distribution, and food safety, rural community development and welfare problems, and rural-urban land use, and it was putting more effort into environmental and natural resource issues, often in collaboration with other agencies in federal and state government.

Political and policy support for rural community development, which had increased in the late 1970s, began to wane in the 1980s (Daft, 1991:150). Effective policy interest in rural development has long experienced wide, repeated swings between strong interest and support and almost none. In part, the lack of consistent political support appears due to the great diversity of rural interests and a consequent lack of an organized voice or coalition of voices able to sustain rural interests at state, local, and national levels. Despite these fluctuations in support, ERS has continued to develop and to maintain the only systematic, national data base for understanding and analyzing the problems of rural development. A major ERS innovation in the 1980s created greater capacity for generalizing causal relationships in rural development, by developing a standard, quantified classification of the primary categories of economic activity for all U.S. rural counties. Without this sustained ERS data base, much of the comparative rural development work done at the state level and in universities would not be as useful or even possible in some cases.

Even ERS's agriculturally related work grew more diverse in the 1980s. Publications on new topics in agriculture or those demonstrating increased frequency included, for example, pesticides, energy requirements and costs, foreign ownership of farm land, changing structure of farming, economies of farm size, corporate farming, ethanol, bovine somatotropin (a hormone) use in dairy production, and new farm regulations on sod busting and swamp busting, to name a few examples.

ERS has faced difficult problems in maintaining the resource base and organization of its highly effective S&O teams. As the organization of ERS shifted to deal with a broadening scope of issues beyond agriculture and as its resource base shrank, the S&O teams lost resources and support. Martin Abel (1991) has described several weaknesses that developed by the late 1980s. Without the integrative effects of S&O teams, the research, policy analysis, and information and intelligence functions of ERS, although still strong complements, became more difficult for management to coordinate. By the mid-1990s, the ERS investment in S&O commodity market analysis had become perilously thin. Compounding the problem was the late 1970s creation of an independent World Agricultural Outlook Board. This change made organizational sense, but it also transferred professionals and funds away from ERS and created ambiguity and uncertainty about the ERS role and responsibilities in the S&O programs of the department

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

that have not yet been resolved. This is indicative of a growing organizational issue that USDA and ERS face today in producing and mobilizing information and analysis of policy problems. Policy issues increasingly require collaboration of diverse USDA (and often non-USDA) agencies to create and interpret the necessary information and analysis. In these cases, no single agency, including ERS, can by itself ensure the production of a high-quality, relevant product. Leadership for such an effort must come from the secretary's level, and on occasion from the interagency cabinet level.

As a consequence of the farm crisis, USDA expenditures on farm programs again grew to be the largest USDA budget category through the mid-1980s. Despite their high rate of growth, food stamp and nutrition programs exceeded farm program budgets in only four years in the 1970s and five years in the 1980s. Farm program expenditures fluctuate widely and have been largest when agricultural market prices are low, surplus stocks high, and farmers in financial trouble. Since 1988, however, the still-expanding food and nutrition budget has consistently been the largest expenditure category. By the end of the 1980s, it had grown to 50 percent of the USDA budget. Today, food and nutrition expenditures are annually 60 percent or more of the total USDA budget (Figure 3.3). Food stamps account for most of these expenditures (Figure 3.4). Natural resource and environment programs have also continued to grow and, in the mid- to late 1990s, now rank third in size of budget and account for more than 7 percent of a $60 billion dollar USDA budget (Figure 3.3). Food safety, although not a large budget item, grew in policy importance in the 1980s. Farm program expenditures, while varying widely, continued to decline slowly as subsidies have been constrained or reduced in every farm act since the 1985 legislation. This trend ended in 1998 when Congress began responding to another farm income "crisis."

The politics of agriculture became even more fragmented over the 1980s due in part to continued industrialization of the food system, and also to an opening up of access to U.S. political institutions, including Congress, and to a progressive fragmentation and proliferation of all economic and social interests (Browne, 1995; Bonnen et al., 1996). Agricultural interests and leaders in Congress can no longer exclude other voices from agricultural policy, and agriculture, as an economic sector, has become too interdependent with other domestic sectors and too important and politically difficult a dimension of trade negotiations to be left to its own devices in legislation and trade matters. Thus, depending on the topic, other cabinet agencies now participate in and influence decisions that once were the sole purview of USDA, or nearly so: the Agency for International Development and the Department of State in foreign food aid, the Department of the Interior and the Environmental Protection Agency in many environmental and natural resource issues in agriculture; and the Department of Health and Human Services in food programs. Half the cabinet participates in international trade negotiations, typically including the departments of State, Treasury, Commerce, Labor, and Defense. The policy process has become far more complex and deci-

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Figure 3.4

Federal expenditures on food programs, 1962–1996. Source: Economic Research Service, Historical Budget Outlays, electronic data base, U.S. Department of Agriculture, March 1995.

sions more difficult to reach. At the same time, the "farm vote" is now so relatively small that, unless the farm sector is in serious trouble (as it is again today), presidents no longer feel compelled to pay much attention to farm policy during their campaigns—or afterward. Congress is the dominant forum for farm policy today.

In ERS, John Lee followed Kenneth Farrell as administrator in 1981 and served for 12 years through the Reagan and Bush administrations. He retired in 1993, having had the longest tenure of any administrator of ERS. Lee and his first boss, Assistant Secretary for Economics William Lesher, inherited political trouble with Congress. ERS had done earlier research on the recent embargoes, which suggested that they had failed to achieve their purpose—a conclusion that a later, large-scale, academic-based research project validated (Economic Research Service, 1986). This result, plus the conclusion of work in the 1970s on the growing concentration of production and the changing structure of farming, left some influential members of Congress quite critical of ERS. One member of Congress introduced an amendment to the 1981 Senate agricultural bill that would have reduced ERS numbers by more than 100 positions. The new, politically experienced leadership of the department successfully defended ERS (Lesher, 1991). The assistant secretary subsequently had other uncomfortable occasions to defend ERS research from attack, including pressure to kill an ERS research project.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

Over the 1970s and 1980s, many farmers became increasingly resentful of the growing intrusions of nonfarm interests and programs into "their department" and "their programs." This resentment created political difficulties for Congress and USDA as early as 1973, when the negotiations with labor and consumer interests needed to pass the 1973 farm bill had to be handled through third parties to protect the principals from political retribution (Bonnen, 1980). Thus, when the farm crisis of the early 1980s occurred, not only was a substantive response to farmer problems necessary, but also a less substantive—even symbolic—response was needed to assure farmers of USDA political concern and commitment to action.

In this context and under the pressure of both an erosion in real dollar resources and a decline from 1970 to 1980 of well over 100 personnel positions, ERS made two organization changes. The field staff, stationed at land grant universities since the BAE days, was disbanded in 1983 and its approximately 200 positions moved to Washington, D.C. (Rasmussen, 1991:89). This had a substantial negative impact on the smaller departments of agricultural economics and on ERS-university relations. From the Washington, D.C., point of view, the field staff had become too involved in university research agendas and was disconnected from the national mission of ERS. Field staff, in contrast, saw their role as one of helping to maintain good university-ERS relations, providing ERS with direct access to university research, facilitating joint work and also creating greater ERS capacity to understand and analyze local and regional problems, which the growing complexity of the farm programs required ERS to address. A significant number of the field staff left ERS rather than move to Washington, D.C. This increased the size of the staff in Washington, D.C., but it did not change total ERS numbers, since field staff had always been included in the total personnel numbers. Total ERS personnel numbers have continued to decline up to the present (Table 3.2). Following the substantial increase in their work on farm crisis problems, ERS in 1987 again modified its division structure to accommodate the focus of its work, changing division names so that it appeared symbolically as if agriculture were its only concern—which clearly was not the case (Box 3.1).

Changing Resource Base

With a few fluctuations, inflation-adjusted appropriations for ERS grew by 24 percent between fiscal 1962 and fiscal 1979, and the number of employees remained relatively stable, at about 1,100 until the mid- 1970s. Since 1978–1980, inflation-adjusted appropriations and personnel numbers for ERS both trace a pattern of slow decline, to just over a 20 percent drop in the budget and more than a 40 percent cut in personnel. Almost 60 percent of this decline in personnel and almost 80 percent of the decline in budget have come since 1992.

In addition, ERS received budget transfers from other agencies. These trans-

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

fers came both from within USDA and from outside, for contract research and analysis (Table 3.1). In inflation-adjusted terms, these transfers have ranged from a significant part of total resources (26 to 29 percent) in the last half of the 1960s to a quite small proportion (4 to 5 percent) over the late 1980s. In the period since 1992, the importance of transfers has increased again, varying between 10 and 18 percent of ERS's total inflation-adjusted resources.

One has to add the qualification that some unknown portion of such transfers in the USDA budget have periodically been pass-throughs to land grant universities and other organizations and not net additions to ERS resources. The Agency for International Development (AID) financed much of ERS's early work in international food aid and development. AID has continued to depend on ERS research capacities, most recently contracting $2–3 million per year with ERS from 1992 to 1996. The Soil Conservation Service (now the Natural Resources Conservation Service) has funded many major research efforts in ERS, including the large multiple river basin studies of the 1960s and the 1970s (Bowers, 1990:242–243). A good portion of the increase in budget transfers since 1992 has consisted of pass-throughs to state organizations from the Federal Crop Insurance Corporation ($1–2 million per year) and the Rural Housing and Community Development Service ($2–3 million per year). Thus, the apparent increase in budgetary transfers to ERS since 1992 is illusory, since most of the increase appears to be in the form of pass-throughs (ERS Information Services Division communication to panel).

When ERS and the Statistical Reporting Service (now NASS) were established in 1961, each had about 1,000 employees. In fiscal 1998, ERS had 554 and NASS has about 1,100 total personnel (Table 3.2; NASS internal communication). In each case in the 1960s, professionals probably constituted no more (and probably less) than half of the total number of employees. It is important to remember that, in a computationally intensive environment during the age of the preelectronic office, most calculations—both research and statistical—were done by large pools of clerks using technologies no more advanced than pencils, tabular paper, slide rules, and comptometers (precursor to the early Frieden and Marchant calculators). In these early days (Seaborg, 1991:25–26):

You could see ditto machines with the smell of stencils and black ink, not copy machines that can readily produce many collated copies of your project. Slide rules were in common use as office machines made a lot of noise because they were mechanical. IBM electric typewriters were typical, but there were still many manual machines in use. Stacks of punch cards filled file drawers because that is how data was entered into the mainframe computers. By-the-way, the drum type computer was still in use. The use of computers was carefully monitored and each job order had to be justified. It often took several days to run a rather routine analysis.

Information on the composition of ERS personnel is available for only a few recent years (from 1995 on). Between 58 and 60 percent of all ERS positions

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

TABLE 3.3 Economic Research Service Permanent Staff

Count at end of the fiscal year

Economists

Other Social Scientists

Other Staff

Total Staff

1995

354

26

231

611

1996

349

22

213

584

1997

331

21

202

554

25 April 1998

306

19

198

523

 

Source: Information Services Division of the Economic Research Service, U.S. Department of Agriculture.

today are held by professionals classified as economists. The next largest group, 36 to 38 percent, are support staff. Another 5 percent of the ERS staff are social science professionals other than economists (Table 3.3). Of the economists, 62 percent have Ph.D.s, 35 percent have master's degrees, and 3 percent have bachelor degrees (Table 3.4). Although actual counts are not available, estimates obtained in interviews with ERS economists from the 1960s suggest that, given the office and computational technologies of the early 1960s, at least half, probably more, of early ERS personnel were support staff, whereas today the number is between 35 and 40 percent. If these estimates are accurate, then the numbers of professional economists in ERS have declined by 40 to 50 percent since 1962 and support staff by about 65 percent.

It is also worth noting that in the BAE and in the early ERS days, all, or practically all, economists on USDA's rolls worked in the BAE and ERS. Today, however, the majority of USDA economists me employed outside ERS in other USDA agencies, most significantly in the Foreign Agriculture Service, the Natural Resource Conservation Service, and the Forest Service. In addition, the larger action agencies now typically have a dozen or so of their own professional economists working on their economic policy and regulatory program issues (Table 3.5).

The decline in ERS resources and personnel can be attributed to a number of

TABLE 3.4 Highest Degrees Held by Economic Research Service Economists (March 1997 Survey Data)

Total Respondents

Ph.D.

Master's

Bachelor's

297

183

104

10

Percent of total

62%

35%

3%

 

Source:Information Services Division of the Economic Research Service, U.S. Department of Agriculture.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

TABLE 3.5 U.S. Department of Agriculture Employees Classified as Economists (as of 13 May 1998)

Economic Research Service

306

Foreign Agriculture Service

113

Natural Resource Conservation Service

66

Forest Service

47

Rural Business and Cooperative Service

26

Agricultural Marketing Service

25

Office of the Chief Economist

18

Farm Services Agency

16

Animal and Plant Health Inspection Service

12

Others (9 agencies)

29

Total

658

Note: There are many more economists in the USDA, a significant portion with M.A. and Ph.D.s, who are classified in other categories. A major example would be the large number of ''foreign service officers" in the Foreign Agricultural Service, most of whom were trained as economists.

Source: Information Services Division of the Economic Research Service, U.S. Department of Agriculture.

sources. Over the period since the 1960s, automated and electronic equipment have substituted for a good portion of the statistical clerks and other support personnel. After a period of growth in government-wide investment in social science research over the 1960s and 1970s, the decade of the 1980s saw major cutbacks in such research and the growth of an anti-intellectualism in society. Support for government research has eroded, especially in highly visible, contested areas of public policy.

In the more recent period since fiscal 1992, government efforts to reduce the large federal budget deficit have resulted in declining appropriation for most cabinet agencies. In addition, interviews conducted by the panel produced multiple accounts of dissatisfaction with the quality of ERS analysis and its responsiveness to clients. These are difficult to assess. Complaints ranged from erroneous analyses, to refusal to share research done for trade negotiations in agriculture, to the belief that some critical research and analytic product provided to Congress or the Office of Management and Budget was constrained by the politics and policy positions of USDA. These complaints were often contested and my be wrong, but it is important to understand that irrespective of the complete accuracy of these complaints, these perceptions alone erode the credibility of ERS and the value of its products.

It should be noted that since 1992 the ERS base budget has declined at twice the rate of USDA a whole. If executive and legislative leadership do not soon

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

agree on common rules for access to ERS services and act to ensure the performance, independence, and credibility of this research and information function, it will continue to decline in capacity and relevance to the increasing complexity of the industry and policy areas it serves in food, agriculture, natural resources, and the environment.

Lessons Learned

More than seven decades of BAE-ERS experience suggest some clear principles that govern the successful organization and management of a federal agency dedicated to research and analysis of high integrity.

First, the history of the BAE-ERS demonstrates the important value of a cadre of professionals in government capable of providing reliable primary data, secondary data and analysis, short-term problem analysis, and longer-term research products—especially when faced with new problems or in conflicted periods of rapidly changing conditions (e.g.,see Finegold and Skocpol).

Second, a federal research and analysis agency must be protected by both its cabinet secretary and the Congress from politicization of its products and its internal decisions. The integrity and long-term survival of such a service function is highly vulnerable to the political conflict that accompanies the policy process. Government research units have little capacity to protect themselves through their own actions, and few of their clientele are willing or able to do so. In turn, the agency must expect, and be allowed, to provide both the Congress and the secretary with access to reliable, high-quality research and information products (Kirkendall, 1982:257; Bowers, 1990:236). Failure of the agency to provide a high-quality, relevant product will lead to the eventual demise of the agency. As a corollary, Congress and the cabinet secretary must be free, and be expected, to disavow any responsibility for a research or information product that conflicts with their views, even as they must defend the independence of the research agency.

Third, all major federal research and information products eventually develop a diverse set of users in both the private sector and well beyond the federal government in the public sector. In a democratic, open society, this is both inevitable and necessary. Common rules should govern such access, if conflicting expectations are to be avoided.

Fourth, if it is to maintain a reputation for, and the reality of, integrity of product, a federal research and analysis agency must not be expected to participate directly in policy decisions. It may evaluate problems and alternative solutions, but it may not safely recommend or advise a specific policy action or participate in its implementation. As we have seen, such actions can destroy an agency. As a consequence, as both T.W. Schultz (1954) and John D. Black (1947:1035–1036) long ago concluded, the day-to-day staff work for the secretary's office and the other "constant, routine, 'trouble shooting' work or quick

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×

program analysis" (Schultz, 1954:20) should not be done by a federal agency responsible for objective, high-integrity, longer-term analysis and research.

Fifth, a federal research agency should be organized and managed to take advantage of the strong complimentarity between research products, problem analysis and secondary data development, and its analytic structures (Schultz, 1954:20–21).

Sixth, the Office of the Secretary must have the capacity to use economic research and problem analysis. Since it is unrealistic to expect every secretary to be an economist, this means that there should be a political appointee (i.e.,assistant secretary for economics or chief economist) who has these skills and who reports directly to the secretary.

A federal research unit should be independent and protected by the secretary's office from all direct political influence, but this arrangement creates an organizational dilemma. It must also be connected to the line structure of the cabinet department at high enough level to remain well informed about the longer-term information and research needs of decision makers but remain functionally separate—i.e., independent. Lessons from the past strongly suggest that the research agency should report to an assistant secretary for economics (or policy). This would be a political appointee with direct access to the secretary who is a policy economist with experience necessary to understand, protect, and balance the goals of independence, policy access, and responsiveness (Cochrane, 1983:30). History demonstrates that failure to provide such a position leaves the research unit subject to the political whims and pressures of cabinet secretaries and deputy secretaries who are often under too much political pressure to respect the integrity of such units. Since 1993, ERS has been in just such a vulnerable and hazardous position within the line authority of USDA.

Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 46
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 47
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 48
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 49
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 50
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 51
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
Page 52
Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
×
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Suggested Citation:"3 The Lessons of History." National Research Council. 1999. Sowing Seeds of Change: Informing Public Policy in the Economic Research Service of USDA. Washington, DC: The National Academies Press. doi: 10.17226/6320.
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Every day economic decisions are made in the public and private sectors, based on limited information and analysis. The analysis and information needed for successful public policy has changed rapidly with the growth of the global economy, and so have the means for acquiring them. In the public sector, decision makers rely on information gathered within government agencies, as well as the work of academics and private firms.

Sowing the Seeds provides a case study of the need for analysis and information in support of public policy. It combines lessons learned from one of the first government agencies devoted primarily to this function with modern economic theory of organizations. The panel provides analysis and insight on:

How and why public economic policy evolves with technological advances.

The nature of information and analysis in support of economic policy produced in a government agency.

The characteristics of successful information and analysis programs.

Evaluating the work of a government agency providing information and analysis.

Effective administration and organization of research and information programs in a government agency.

Findings and recommendations in this volume will be of interest to managers and executives of research and consulting organizations in the public and private sectors, as well as to economists and policy makers.

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